The legal framework for Special Economic Zones (SEZs) provides
for broader tax and other concessions. The 29 zones currently established have
geographical boundaries and are of four types: Manufacturing, Technology &
Innovation, Tourism & Recreation, and Port & Logistic. All are created for
a period of 49 years. Although they were slow to take off originally, the
infrastructure of many of the Manufacturing and Technology & Innovation
SEZs is well advanced and more than 350 investors, including foreign investors,
are now involved. The potential benefits include a customs-free zone, accelerated
depreciation, reduced social contributions and a guarantee against unfavourable
changes in tax law. Reduced rates of profit tax also apply, depending on the
regional authority and type of zone, but before 2012 the overall rate could not
be less than 15.5%. From 2012, the minimum rate is 2% (the federal portion of
the tax), and 0% in the case of Technology & Innovation SEZs. Kaliningrad
and Magadan have separate SEZ regimes, under which different concessions apply.

Skolkovo

The Skolkovo Innovation Centre is a site close to Moscow which
aims to attract R&D activity in a number of specific technical fields. All
participants are exempt from profit tax, property tax and VAT, while social
security contributions are reduced. In the majority of cases, therefore, the
total tax burden will be limited to 14% social contributions on salaries paid
(only for the part of remuneration not exceeding a cap of RUB 711 thousand per
person to the Pension Fund of Russia and RUB 670 thousand per person to the
Social Insurance Fund). Exemptions expire 10 years after becoming a participant
or once a revenue/profit threshold is reached.

Source: Deloitte

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